At blood center, big salaries are back

Four years ago, Florida's Blood Centers was in the midst of turmoil and controversy that ultimately cost the CEO her job.

There were conflicts of interest among board members. Donations were dropping. The agency was laying off employees.

But the part that most angered many donors was the fact that the CEO of this local nonprofit had a compensation package worth more than $600,000 — a hefty sum for a tax-exempt charity that depends on voluntary giving.

So the CEO left. New board members came in. And they vowed to clean things up.

And they did. The agency implemented stronger ethics policies and scaled back salaries significantly.

But then Central Florida's blood center merged with a South Florida center to create a larger entity, called OneBlood.

And when I started looking at OneBlood's latest tax filings, I was surprised by what I found.

The total compensation package of OneBlood CEO Don Doddridge is now $679,000 — larger than it was when people were screaming bloody murder.

Just as troubling, the Pittsburgh blood center that OneBlood is preparing to merge with pays its CEO even more: $750,000. (And the nonprofit Institute for Transfusion Medicine — ITxM — is actually smaller than OneBlood.)

To put these salaries in perspective, each is bigger than those earned by the CEOs of Give Kids the World, Heart of Florida United Way and Second Harvest Food Bank … combined.

Perhaps more apropos, these two regional execs each make more than the CEO of the largest blood nonprofit in the United States: the American Red Cross.

Think about that. The Red Cross controls 40 percent of the country's blood supply — and has a budget 10 times bigger than either OneBlood or ITxM. Yet Red Cross CEO Gail McGovern's compensation package of $621,000, while still big, is less.

The pay is at odds with these agencies' size — but also with the altruistic missions they espouse.

Their pitch to donors, after all, is that giving blood is simply the right thing to do. Yet these nonprofits suggest their own CEOs wouldn't even walk through the front door each morning for less than $679,000 a year.

All this at a time when blood costs — and health-care costs in general — are exorbitant.

The base salary for both men was lower than their total packages. Doddridge's was $442,000. And at ItxM, CEO James Covert earned $409,000, according to the 2012 Internal Revenue Service filings (the most recent available). The rest is paid in the form of deferred compensation, benefits and "other compensation." Covert's package included $236,000 worth of bonuses and incentives.

Covert also gets complimentary membership to Pittsburgh's exclusive Duquesne Club, which bills itself as "America's preeminent and most respected private city club."

"These compensations are definitely on the high side," said Sandra Miniutti, vice president of Charity Navigator, one of the nation's leading authorities on nonprofit spending.

"And you have to wonder: What happens when the charities merge? Will one CEO step down or will the combined entity pay out over $1 million to its two top executives? Is that really how donors want their contributions spent?"

Each agency also has several vice presidents with packages in the $250,000 to $300,000 range.

Rick Walsh, the volunteer chairman of the OneBlood board, makes several points about all this — some of which made me feel better.

The first, however, did not. Walsh noted that OneBlood's CEO salary isn't out of line with other blood centers.

Walsh noted that OneBlood found plenty of blood-center execs who make even more. And that's absolutely right. OneBlood even found one in Arizona who made more than $1 million.

But let's be clear: You can get compensation consultants to find whatever you want them to find. There are entire cottage industries of consultants meant to justify big paychecks.

But you can also find examples of people working for less. And, if you're running comparisons, I'm not sure how anyone could justify paying a regional CEO more money than someone running a national center that's 10 times bigger.

The best nonprofits set their salaries based on, yes, market comparisons — but also upon what they believe is appropriate, given their mission.

That's why organizations such as Habitat for Humanity International — a global nonprofit — pay their leaders less than half what these regional blood centers do .... because Habitat for Humanity wants to demonstrate commitment to its cause. And to its donors.

Walsh said he gets all that — and even agrees. He noted that, before the merger with OneBlood, Florida's Blood Centers cut its CEO pay in half. Without getting too specific, he sees potential for cuts again in the future.

He also noted that he has insisted board members remain unpaid volunteers, free of ethical conflicts, and that blood prices are dropping. Those are all good things, especially because OneBlood is this community's only option for donors.

But the part I liked more was Walsh's talk about a desire to restructure the center's entire finance model to make blood costs lower for everyone, possibly through a foundation or resource pool.

I find some solace in that. Because cost and availability of this lifesaving substance are really what it's all about.

A hospital visit shouldn't bankrupt anyone.

That's why these agencies — be they blood centers, hospitals or any other nonprofit — should make saving money for patients a higher priority than making money for their executives.